Buy Happy Forgings; target of Rs 1125: Motilal Oswal

Motilal Oswal's research report on Happy Forgings

Happy Forgings (HFL) is a Ludhiana-based company specializing in diversified forging and machining services. With over four decades of industry experience, it manufactures and delivers top-quality, intricate components. It is ranked as the fourth largest engineering-led manufacturer in India for complex and safety-critical, heavy forged, and high-precision machined components. The company is well established within the industries and customer segments it serves, including a) heavy commercial vehicles (contributing to 41% of revenues), b) farm equipment (32%), c) off-highway vehicles (14%) and industrials (13%). Founded in 1979, HFL’s entire operations are based out of Ludhiana, Punjab, with three vertically integrated manufacturing facilities. HFL is well poised to grow in the coming years, led by expansion through increased capacities, product diversification, client acquisition, and emerging opportunities in industrials and exports.

Outlook

We expect 21%/25%/30% CAGR (over FY24E-26E) in standalone revenues/EBITDA/PAT and initiate coverage on the stock with a BUY rating and a TP of ~INR1,125 (based on 26x FY26E EPS).